The Brazilian will soon put pen to paper on a move that is the talk of football and one which will shatter all previous records after an already remarkable summer of spending.
But PSG can recoup that transfer fee in shirt sales, right? Wrong.
To explain The Independent asked Jake Cohen, a sports lawyer who has worked on a number of high-profile transactions in football, to debunk the myth.
It is often claimed that a club can recoup a marquee player’s transfer fee through shirt sales. However, in reality, this couldn’t be further from the truth.
Kit deals are not traditional sponsorship deals – they are licensing deals, which enable the kit manufacturers to use the club’s brand to sell branded apparel. Clubs will traditionally receive an annual fee – for example, Manchester United receives £75 million per year from Adidas, Chelsea receives an initial £60 million per year from Nike, and Arsenal receives £30 million per year from Puma – and then 10-15% of the revenue the kit manufacturer generates from shirt sales.
Furthermore, signing a star player doesn’t lead to as many new kits being sold as one might think. While there will usually be an uptick in shirts sold in the market where the player came from, it is more often the case that those who were already planning on purchasing a shirt will choose to get the new player’s name on the back, rather than an existing player.
The kit deal is often a football club’s most lucrative sponsorship, and for good reason. The manufacturers aren’t paying the clubs to have a tiny logo emblazoned on the front of the club’s shirt – rather, they’re making an investment that will yield an excellent return. As an example, Adidas CEO Herbert Hainer projected that Adidas would earn £1.5 billion from its ten-year, £750 million deal with Manchester United.
Why don’t football clubs simply manufacture their own shirts and keep 100% of the profits? The simple answer is because they’re football clubs, not kit manufacturers. They don’t have the global distribution networks necessary to manufacture, ship, and sell hundreds of thousands, or in some cases, millions of shirts each year. Many clubs even outsource the logistics of their online shops, which are miniscule operations compared to what is required to manufacture, distribute and market kits on a global scale.
Football clubs don’t have access to these resources. Even the largest football clubs in the world are comparatively tiny businesses when it comes to the likes of Adidas and Nike. To put it in perspective, Nike has earned substantially more in three months (nearly £7 billion for March, April, and May 2017) than Chelsea have earned in its 112-year history.
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